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As filed with the Securities and Exchange Commission on May 21, 1999
Registration No. 333- _____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AXENT TECHNOLOGIES, INC.
(Exact Name of Registrant as specified in its charter)
2400 Research Boulevard, Suite 200
Rockville, MD 20850
(301) 258-5043
(Address of Principal Executive Offices)
Delaware 87-0393420
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
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John C. Becker
Chief Executive Officer
AXENT Technologies, Inc.
2400 Research Boulevard, Suite 200
Rockville, Maryland 20850
(301) 258-5043
(Name, address, including zip code and telephone number,
including area code of agent for service)
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Copies to:
Craig E. Chason, Esquire
Shaw Pittman
1676 International Drive
McLean, VA 22102
(703) 790-7900
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box.[x]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[_]
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CALCULATION OF REGISTRATION FEE
=======================================================================================================================
Title of Each Proposed Maximum Proposed
Class of Securities Amount to be Aggregate Price Maximum Aggregate Amount of
To Be Registered Registered Per Unit (1) Offering Price (1) Registration Fee (1)
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<S> <C> <C> <C> <C>
Common Stock, par value
$.02 per share 1,337,531 $10.41 $13,923,967.71 $3,870.79
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 457(c), the proposed maximum aggregate offering price and
registration fee are based upon the average of the high and low prices per
share of AXENT's Common Stock on May 17, 1999, as reported on the Nasdaq
National Market.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act, or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 21, 1999
AXENT TECHNOLOGIES, INC.
[LOGO]
1,337,531 SHARES OF COMMON STOCK
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" REFERENCED ON PAGE 4 IN DETERMINING
WHETHER TO PURCHASE THE AXENT TECHNOLOGIES, INC. COMMON STOCK
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These shares of common stock are being offered by certain selling
stockholders, identified in this prospectus. We issued the shares to the
selling stockholders in connection with the acquisition of CKS Limited in March
of 1999. The selling stockholders may sell these shares from time to time on
the over-the-counter market in regular brokerage transactions, in transactions
directly with market makers or in certain privately negotiated transactions.
For additional information on the methods of sale, you should refer to the
section entitled "Plan of Distribution" on page 11. We will not receive any
portion of the proceeds from the sale of these shares.
AXENT Technologies, Inc.'s common stock is quoted on the Nasdaq National
Market under the symbol "AXNT."
On May 17, 1999, the last sale price of the common stock on the Nasdaq
National Market was $10.50 per share.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. NO ONE MAY SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
The date of this prospectus is May 21, 1999
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TABLE OF CONTENTS
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Page
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<S> <C>
The Company 3
Risk Factors 4
Use of Proceeds 10
Selling Stockholders 10
Plan of Distribution 11
Legal Matters 11
Experts 11
Where Can You Find More Information 12
Information Incorporated by Reference 12
Disclosure of Commission Position on Indemnification for Securities Act Liabilities 12
</TABLE>
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We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You should
not rely on any unauthorized information. This prospectus does not offer to
sell or buy any shares in any jurisdiction in which it is unlawful. The
information in this prospectus is current as of the date on the cover.
THE COMPANY
AXENT Technologies, Inc. is a leading developer and provider of information
security solutions designed to manage security policies and protect the
integrity of enterprise computer networks, including Internet-based systems,
internal networks, and individual servers, workstations and desktop and laptop
computers. Our products address more of the information security issues facing
organizations than any other single vendor and our solutions provide functional
robustness and multiple platform coverage. We also provide consulting services
including assessments of computer system security vulnerability, assistance with
product installation and training and specialized services regarding assessments
of system security and solutions thereto. Our products assist by reducing the
risks associated with the vulnerabilities inherent to today's computing
environments where computer hackers, curious or disgruntled employees,
contractors and competitors can gain access to, compromise or destroy sensitive
information available on a company's computer systems or disrupt the normal
operation of the systems.
Our products permit customers to establish and modify information security
policies for certain critical computer networks or all of their computer
networks, assess compliance with those policies, detect suspicious activity
indicating possible unauthorized users or hackers on those networks, test
computer systems for security vulnerabilities and maintain and monitor data
confidentiality. Other products of ours permit customers to control external
access to their computer systems and networks, authenticate users of computer
systems and networks, provide and manage remote network access and provide
virtual private networking capabilities for remote users and remote sites so
that they have encrypted communications even when using the Internet and other
insecure communications media. Still other products of ours provide user
administration functions, so that an administrator can easily add, remove or
change access privileges of single users or groups of users of computer
systems and networks, and permit an administrator to establish and manage rights
and privileges of users of Web-based systems, such as electronic commerce sites
for customers, suppliers and distributors.
We also offer services to help organizations develop a framework or roadmap
for assessing potential system vulnerabilities, for developing security policies
and for selecting and implementing solutions and compliance efforts. We also
offer training and certification courses for the installation and use of our
products and for general information security topics.
In order to maintain our leadership in the field of information security
technology, we expect to continue expanding our product offerings through
acquisition, internal development and marketing arrangements. While many of our
security products have been internally developed, we have used and anticipate
using acquisitions to expand our product and service offerings.
Our principal executive offices are located at 2400 Research Boulevard,
Suite 200, Rockville, Maryland 20850 and our telephone number is (301) 258-5043.
As used in this prospectus, "we," "us," "our" and "AXENT" refer to AXENT
Technologies, Inc., a Delaware corporation, and its wholly-owned subsidiaries.
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RISK FACTORS
In addition to the other information contained in this prospectus, you
should consider carefully the following factors in evaluating us before
purchasing shares of our common stock:
Our Quarterly Revenues And Operating Results Will Fluctuate Because Sales
Of Our Products Are Subject To Demand And Timing Considerations Of Our
Customers. We have experienced significant quarterly fluctuations in our
operating results and anticipate possibly substantial fluctuations in our future
operating results. We generally have experienced seasonal variations in our
operating results, with higher revenues, operating income and net income in our
fourth quarter than in our first quarter of the following year, and with lower
revenues, operating income and net income in the summer months, when businesses
often defer purchase decisions. Also, we have historically recognized a
substantial portion of our license revenues in the last month of each quarter,
and even in the last week or last several days of each quarter. Because we have
little or no backlog, quarterly revenues and operating results depend on the
volume and timing of orders received during each quarter, especially during the
last several weeks and days of each quarter, which are difficult to forecast.
If our operating results fall below expectations of analysts, the trading price
of our common stock may decline dramatically.
Operating results may also fluctuate significantly on a quarterly basis due
to the following factors:
* demand for our products,
* the size, timing, cancellation or delay of customer orders,
* introduction of new products and product enhancements by us
or our competitors,
* market acceptance of new products introduced by us or our competitors,
* budgeting cycles of customers,
* changes in the proportion of revenues attributable to licenses and
service fees,
* changes in the percentage of products sold through our direct sales
force and our indirect distribution channels,
* competitive conditions in the industry, and
* changes in general economic conditions.
Our consulting service revenues also tend to fluctuate as consulting
projects, which may continue over several quarters, are undertaken or completed.
Our Revenues Are Significantly Based On Large Individual Contracts; Failure
To Obtain These Contracts Will Have Negative Effects On Our Revenues. The value
of individual transactions as a percentage of our quarterly revenues can be
substantial, and particular transactions may generate a significant portion of
our operating profits for the quarter in which they are signed. The licensing
of many of our products generally involves a long sales cycle (between six and
twelve months) and is subject to a number of significant risks over which we
have little or no control. Because many of our operating expenses are based on
anticipated revenue levels, a substantial portion of which are not typically
generated until the end of each quarter, and a high percentage of our expenses
are fixed, delays in the receipt of orders can cause a significant variation in
operating results from quarter to quarter. In addition, we may expend
significant resources pursuing potential sales that will not be consummated. We
also may choose to reduce prices or to increase spending in response to
competition or to pursue new market opportunities, which may significantly
reduce our operating results in the short-term. For those reasons, you should
not rely on our prior operating results or projections of future operating
results as an indication of our future performance.
Completed Acquisitions of Businesses or Technologies May Not Be Successful
or Possible Future Acquisitions May Not Occur. In the normal course of our
business, we evaluate potential acquisitions of businesses, products and
technologies that could complement or expand our business. We may not be
successful in integrating the businesses and technologies of acquisitions that
we have completed, such as the acquisition of Internet Tools, Inc. in January
1999 or of CKS Limited in March 1999. Our failure to integrate successfully
could materially adversely affect our operating results, financial condition and
the trading price of our stock. If we identify a desirable acquisition in the
future, we may not be able to successfully negotiate the terms of the
acquisition, finance the acquisition or integrate the acquired business,
products or technologies into our existing business and operations. An
acquisition, whether or not completed, may materially adversely affect our
financial
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condition and results of operations. Also, our evaluation and pursuit
of possible acquisitions, and our integration of completed acquisitions, may
divert our management time and resources from necessary aspects of our business
and operations. Our failure to make acquisitions in the future may adversely
affect our competitive position, our product offerings and our business. Also,
any future acquisition in which we pay a substantial amount of cash
consideration may adversely affect our liquidity and financial condition, and
any future acquisition in which we issue a significant amount of our stock as
consideration may cause our stockholders to suffer a significant dilution of
their interests.
Our Stock Price Has Historically Been Volatile, Which May Make It More
Difficult For You To Resell Shares When You Want At Prices You Find Attractive.
The market price of our common stock, which is traded on The Nasdaq National
Market, has been subject to significant fluctuations in the past and may be
subject to significant fluctuations in the future in response to operating
results, announcements of technological innovations or new products by us or our
competitors, patent or proprietary rights developments and market conditions for
computer industry stocks in general. In addition, the stock market in recent
years has experienced extreme price and volume fluctuations that often have been
unrelated or disproportionate to the operating performance of individual
companies. These market fluctuations, as well as general economic conditions,
may adversely affect the market price of our common stock. The trading prices
of many high technology companies' stocks are at or near their historical highs
and reflect price/earnings ratios substantially above historical norms. The
trading price of our common stock may fluctuate dramatically or go to and remain
at low levels. Additionally, it is likely that in some future quarters our
operating results will be below the expectations of public market analysts and
investors. Regardless of the general outlook for our business, the announcement
of quarterly operating results below analysts' and investors' expectations could
have a material and adverse effect on the price of our common stock.
We Are In A Highly Competitive Market; Some Of Our Competitors May Be
More Successful Than We Are In Attracting And Retaining Customers. Competition
in the information security market is intense. We currently compete with
companies that have substantially greater financial resources, sales and
marketing organizations, market penetration and research and development
capabilities, as well as broader product offerings and greater market presence
and name recognition. We expect to face increasing competitive pressures from
our current competitors and new market entrants.
We believe that significant competitive factors affecting the information
security industry are:
* the number of information security functions a product performs,
* the complexity of information security functions a product performs
and a customer's ability to manage certain aspects of those functions,
* the number of different computer operating systems on which a product
operates,
* product quality,
* product performance,
* the number of computer systems that can be controlled simultaneously by
a product,
* product ease of use,
* conformance to industry standards,
* product price and
* customer support.
We may not be able to maintain or enhance our competitive position against
current and future competitors. Negative competitive developments could have a
material adverse effect on our business and the trading price of our stock.
Market Consolidation May Create More Formidable Competitors. There has
been substantial consolidation recently in the information security industry,
and we expect that there will be significant additional consolidation in the
near future. As a result of that increasing consolidation, we expect that we
will increasingly compete with larger firms that have broader product offerings
and greater financial resources. We believe that such competition may have a
significant negative effect on our current and developing collaborative,
marketing, distribution and reselling relationships, our product pricing and our
product development budget and capabilities. Any of those negative effects can
significantly impair our financial condition and our results of operations.
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Information Security Products Are Subject To Rapid Technological Change And
We Must Adapt Quickly To These Changes To Compete Effectively. The information
security industry changes rapidly. Changes can be attributable to frequent new
product introductions, continuing advances in technology and changes in customer
requirements and preferences. The introduction of new technologies could render
our existing products obsolete or unmarketable or require us to invest in
research and development at much higher rates with no assurance of developing
competitive products. Changes in technologies or customer requirements may also
cause the development cycle for our new products to be significantly longer than
our historical product development cycle, resulting in higher development costs
or a loss in market share. We may not be able to counter challenges to our
current products, and our future product offerings may not keep pace with the
technological changes implemented by competitors, developers of operating
systems or networking systems or persons seeking to breach information security.
Our products may not satisfy evolving preferences of customers and prospects.
Failure to develop and introduce new products and product enhancements in a
timely fashion could materially adversely affect our financial condition and
results of operations. Because of the complexity of our software products,
which operate on or utilize multiple platforms and communications protocols, we
have from time to time experienced delays in introducing new products and
product enhancements primarily due to development difficulties or shortages of
development personnel. There can be no assurance that we will not experience
longer delays or other difficulties that could delay or prevent the successful
development, introduction or marketing of new products or product enhancements.
Year 2000 Errors Could Cause Our Products And Those Of Our Customers
To Malfunction. Within the year, software and computer systems used by many
companies and organizations may need to be upgraded or replaced in order to
comply with "Year 2000" requirements. We believe that the current version of
our products are Year 2000 compliant, but undetected errors or defects in our
products may cause Year 2000 errors or our products may be operated on operating
systems or with other software products that are non-compliant, which may expose
us to claims from our customers.
Prior versions of some our products may not be Year 2000 compliant unless
upgraded with maintenance releases, which may require that customers obtain,
install and use more current versions of operating systems. We believe that
disclaimers of warranties and limitations of liability in our license agreements
will adequately protect us in the event that any prior versions of our products
are not Year 2000 compliant, but Year 2000 claims may be made against us
regarding prior versions of our products.
We utilize third-party equipment and software that may not be Year 2000
compliant. We have conducted tests of many third-party software products and
items of equipment containing computer processors that we use in our business
operations to determine Year 2000 compliance. When we have purchased new
software systems for our internal use, we have received confirmations from
vendors of software products critical to our operations that the software is
Year 2000 compliant. We also have obtained statements from vendors of many of
the items of equipment containing computer processors that are critical to our
operations that the processors in such equipment are Year 2000 complaint. Based
on our testing and those statements of vendors of software and equipment
critical to our operations, we currently believe that those third-party software
programs or equipment will be Year 2000 compliant and that we will not incur
significant incremental costs in making Year 2000 fixes in the foreseeable
future. However, despite our efforts to assess these error risks, Year 2000
errors or defects may be discovered in those systems and, if such errors or
defects are discovered, the costs of making such systems Year 2000 compliant
could have a material adverse effect on our business, operating results and
financial condition.
As we derive a substantial portion of our revenues from the distributors
and resellers of our products, a Year 2000 error or defect that affected our
resellers or distributors could have a material adverse effect on our business,
financial condition and results of operations.
Year 2000 Concerns of Customers and Prospective Customers Could Limit Our
Business in 1999. The purchasing patterns of our customers or potential
customers may be affected by Year 2000 issues as companies expend significant
resources to correct their current systems for Year 2000 compliance. These
expenditures may result in reduced funds being available to implement the
information security solutions or to purchase products and services such as
those we offer. In addition, some companies have announced an intention to
delay installing new software products in computer environments critical to
their business operations until 2000. Those reduced expenditures or delays in
purchasing and installing software products could have a material adverse effect
on our business, financial condition and results of operations.
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Our Products Are Complex And Are Operated in a Wide Variety of Computer
Configurations, Which Could Result In Errors Or Products Failures. Because we
offer very complex products, undetected errors, failures or bugs may occur when
they are first introduced or when new versions are released. Our products often
are installed and used in large-scale computing environments with different
operating systems, system management software and equipment and networking
configurations, which may cause errors or failures in our products or may
disclose undetected errors, failures or bugs in our products. We have in the
past discovered software errors, failures and bugs in certain of our product
offerings after their introduction and have experienced delays or lost revenues
during the period required to correct these errors. Our customers' computer
environments are often characterized by a wide variety of standard and non-
standard configurations that make pre-release testing for programming or
compatibility errors very difficult and time-consuming. Despite testing by us
and by others, errors, failures or bugs may not be found in new products or
releases after commencement of commercial shipments by us. Errors, failures or
bugs in our products could result in adverse publicity, product returns, loss of
or delay in market acceptance of our products or claims by the customer or
others. Alleviating such problems could require significant expenditures of
our capital and resources and could cause interruptions, delays or cessation of
our product licensing, which would adversely affect the results of our
operations.
We attempt to limit our liability to customers, including liability arising
from a failure of the security features contained in our products, through
contractual limitations of warranties and remedies. Our consulting agreements
with our customers generally contain provisions designed to limit our exposure
to claims related to negligence or errors or omissions by our employees and
agents. However, some courts have held similar contractual limitations of
liability, or the "shrink wrap licenses" in which they sometimes are embodied,
to be unenforceable. Accordingly, such limitations may not be enforced. We
have insurance providing coverage up to $2,000,000 annually and per occurrence
to defray costs associated with claims arising from product failure and related
loss or damage to data. Notwithstanding that insurance coverage, the
consequences of errors, failures or bugs in our products could have a material
adverse effect on our financial condition and results of operations.
We Depend On Our Key Personnel, Who May Not Continue To Work For Us; There
Is Intense Competition In Recruiting New Qualified Personnel. Our success
depends to a significant degree upon the continuing contributions of our key
management, sales, product development, marketing, professional services and
customer support personnel. The loss of the services of any key employee could
adversely affect our financial condition and results of operations. We believe
that our future success will depend in large part upon our ability to attract
and retain highly-skilled managerial, sales, product development, marketing,
professional services and customer support personnel. We require product
development, consulting services and sales personnel who are highly technically
trained in the field of information security, and the competition for such
individuals is intense. We have at times experienced, and continue to
experience, difficulty in recruiting qualified personnel. Competition for
qualified personnel in the software industry is intense, and there can be no
assurance that we will be successful in retaining our key employees or that we
can attract or retain additional skilled personnel as required. If we do not
succeed in attracting new personnel, or retaining and motivating existing
personnel, our business will be adversely affected.
International Sales Accounts For A Significant Portion Of Our Revenue And
Are Subject To Certain Inherent Risks. Sales outside the United States
accounted for a significant portion of our net revenues from our information
security products in the year ended December 31, 1998. Our international
business may be subject to a variety of risks, including:
* costs and risks relating to establishing and expanding our
relationships with resellers and distributors in certain countries or
regions,
* delays in expanding those international distribution channels,
* difficulties in collecting international accounts receivable from
distributors or resellers,
* increased costs associated with maintaining international marketing
efforts,
* any increase in duty rates,
* introduction of non-tariff barriers, and
* difficulties in enforcing intellectual property rights abroad.
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Our international sales may be denominated in certain non-US Dollar
currencies, and we may be subject to risks associated with fluctuations in
currency exchange rates. As we do not currently hedge foreign currency risk, a
decrease in the value of any of those currencies relative to the U.S. dollar
will affect the profitability in U.S. dollars of our products sold in these
markets.
Government Regulation Of Technology Exports Could Limit Our Ability To
Market Our Products Abroad And To Compete Effectively. Our international sales
and operations may be subject to the following risks:
* imposition of governmental controls,
* new or changed export license requirements,
* restrictions on the export of critical technology,
* import or trade restrictions, and
* changes in tariffs.
While we believe our products are designed to meet the regulatory standards
of many foreign markets, any inability to obtain foreign regulatory approvals on
a timely basis could have a material adverse effect on our financial condition
or results of operations. Certain of our products are subject to export
controls under U.S. law, and we believe we have obtained all necessary export
approvals when required. However, the list of products and countries for which
export approval is required, and the regulatory policies with respect thereto,
may be revised from time to time. Our failure to obtain required approvals
under these regulations could adversely affect our ability to make international
sales.
For example, because of U.S. governmental controls on the exportation of
encryption technology, we have been unable to export some of our products with
the most robust information security encryption technology and will be required
to provide for recovery of encryption keys for access by governmental
authorities in order to export products containing those robust encryption
algorithms. As a result, foreign competitors facing less stringent controls on
their products may be able to compete more effectively than us in the global
information security market. These factors may have a material adverse effect
on our financial condition or results of operations.
Our Intellectual Property And Proprietary Rights Are Costly To Defend And
Difficult To Protect. We regard our software as proprietary, and our success
and ability to compete depends in part upon our proprietary technology and
rights. We rely on copyright and trade secret laws, trademarks, confidentiality
procedures and contractual provisions to protect our proprietary software,
documentation and other proprietary information. Although we hold several
patents and have several pending patent applications which cover certain aspects
of our technology, such patents and patent applications do not protect some of
our security products. Our current and future patent applications may not be
granted. Additionally, our patents may not be sufficiently broad to protect our
technology critical to our security products.
Although the effectiveness of our products does not depend upon the secrecy
of our proprietary technology or licensed technology, the public disclosure of
our technology could result in a perception of breached security and could
reduce the level of our product licensing, which could have an adverse effect on
our financial condition or results of operations. Confidentiality agreements
and other methods on which we rely to protect our trade secrets and proprietary
information and rights may not be adequate to protect our proprietary rights.
Litigation to defend and enforce our intellectual property rights could result
in substantial costs and diversion of resources and could have a material
adverse effect on our financial condition and results of operations regardless
of the final outcome of such litigation. Despite our efforts to safeguard and
maintain our proprietary rights, we may not be successful in doing so or the
steps taken by us in this regard may not be adequate to deter misappropriation
or independent third-party development of our technology or to prevent an
unauthorized third party from copying or otherwise obtaining and using our
products, technology or other information that we regard as proprietary. Our
trade secrets or non-disclosure agreements may not provide meaningful protection
of our proprietary information. Also, others may independently develop similar
technologies or duplicate any technology developed by us. Our inability to
protect our proprietary rights would have a material adverse effect on our
financial condition and results of operations.
We May Be Subject To Intellectual Property Claims, Which Are Costly To
Defend And Could Limit Our Ability To Use Certain Technologies In The Future.
As the number of information security products in the
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industry increases and the functionality of these products further overlaps, we
may become subject to claims of infringement or misappropriation of the
intellectual property or proprietary rights of others. Third parties could
assert infringement or misappropriation claims against us in the future with
respect to current or future products. Further, we may be subject to additional
risk as we enter into transactions in countries where intellectual property laws
are not well developed or are poorly enforced. Legal protections of our rights
may be ineffective in such countries, and technology developed in such countries
may not be protectable in jurisdictions where protection is ordinarily
available. Any claims or litigation, with or without merit, could be costly and
could result in a diversion of management's attention, which could have a
material adverse effect on our financial condition and results of operations.
Adverse determinations in such claims or litigation could also have a material
adverse effect on our financial condition and results of operations.
The Issuance Of New Shares in the Internet Tools and CKS Limited
Acquisitions May Cause Dilution Of Our Per Share Earnings. Although we believe
that beneficial synergies will result from our acquisition of Internet Tools,
Inc. in January 1999 and of CKS Limited (the parent of PassGo Technologies) in
March 1999, there can be no assurance that the combining of those companies'
businesses with ours, even if achieved in an efficient and effective manner,
will result in increased earnings per share (taking into consideration the
greater number of shares outstanding as a result of the acquisitions) or a
financial condition superior to that which would have been achieved by us alone.
While we do not anticipate that our acquisition of either company will be
dilutive for our stockholders over the long term, there can be no assurance
that, if either of those acquisitions fails to produce the anticipated benefits,
it will not have the dilutive effect of causing our per share earnings be lower
than they would have been for us if we had not made that acquisition.
We Do Not Pay Dividends. We have not paid dividends on our common stock
and we do not anticipate paying dividends in the foreseeable future.
Anti-Takeover Provisions Could Make It More Difficult For A Third Party To
Acquire Us. Our Certificate of Incorporation requires that any action required
or permitted to be taken by our stockholders must be effected at a duly called
annual or special meeting of stockholders and may not be effected by any consent
in writing, and requires reasonable advance notice by a stockholder of a
proposal or director nomination which such stockholder desires to present at any
annual or special meeting of stockholders. Special meetings of stockholders may
be called only by the Chairman of the Board, the Chief Executive Officer or, if
none, the President or by the Board of Directors. Our Certificate provides for
a classified Board of Directors, and members of the Board of Directors may be
removed only for cause upon the affirmative vote of holders of at least two-
thirds of the shares of our capital stock entitled to vote. These provisions,
and other provisions of our Certificate, may have the effect of deterring
hostile takeovers or delaying or preventing changes in control or management,
including transactions in which stockholders might otherwise receive a premium
for their shares over then current market prices. In addition, these provisions
may limit the ability of stockholders to approve transactions that they may deem
to be in their best interests.
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USE OF PROCEEDS
The proceeds from the sale of the common stock offered pursuant to this
prospectus are solely for the account of the selling stockholders. Accordingly,
we will not receive any proceeds from the sale of the shares from the selling
stockholders.
SELLING STOCKHOLDERS
The selling stockholders were the holders of all of the capital stock,
issued share capital and warrants of CKS Limited, a private company incorporated
under the laws of England, a holding company that operates PassGo Technologies
entities. We entered into a Share Exchange Agreement dated March 29, 1999 with
the selling stockholders providing for our acquisition of CKS Limited. In that
exchange, which was consummated on March 30, 1999, all of the shares of capital
stock, issued share capital and warrants of CKS Limited were exchanged for
shares of our common stock, and CKS Limited became our subsidiary. The selling
stockholders received a total of 1,486,146 shares of our common stock, 1,337,531
shares of which may be offered for sale from time to time by the selling
stockholders pursuant to the registration statement of which this Prospectus is
a part.
All of the common stock registered for sale pursuant to this prospectus
will be owned immediately after registration by the selling stockholders as the
former stockholders of CKS Limited and all of the shares offered by the selling
stockholders were acquired in connection with the CKS Limited share exchange.
None of the selling stockholders has a material relationship with us, except
that certain selling stockholders are or will be non-officer employees of CKS
Limited or AXENT.
The following table sets forth certain information known to us with respect
to beneficial ownership of our common stock as of May 17, 1999 by each selling
stockholder. The following table assumes that the selling stockholders sell all
of the shares registered for sale hereby. We are unable to determine the exact
number of shares that actually will be sold.
The number and percentage of shares beneficially owned is based on
27,839,563 shares outstanding at April 9, 1999 determined in accordance with
Rule 13d-3 of the Exchange Act, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rule,
beneficial ownership includes any shares as to which the individual has sole or
shared voting power or investment power and also any shares which the individual
has the right to acquire within 60 days of April 9, 1999 through the exercise of
any stock option or other right. Unless otherwise indicated in the footnotes,
each person has sole voting and investment power (or shares such powers with his
or her spouse) with respect to the shares shown as beneficially owned.
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Shares Beneficially Owned
Prior to the Offering Offered by After the Offering
_________________________ this _______________________
Shareholders Shares Percentage Prospectus Shares Percentage
--------- ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
HarbourVest International Equity Partners II 698,992 2.5% 629,093 69,899 *
Jeff Carr 646,639 2.3% 581,975 64,664 *
ABS Employees Venture Fund LP 12,217 * 10,995 1,222 *
BT Alex Brown Inc. 5,093 * 4,584 509 *
Greg Reyes 19,334 * 17,401 1,933 *
Phillip Cook 25,219 * 22,697 2,522 *
Arthur Heil 24,758 * 22,282 2,476 *
Ralph Massaro 24,249 * 21,824 2,425 *
Geoffrey Brown 24,249 * 21,824 2,425 *
Richard Davis 5,396 * 4,856 540 *
========= ========== ========= ======= ==========
1,486,146 5.3% 1,337,531 148,615 *
</TABLE>
* represents less than 1%
10
<PAGE>
PLAN OF DISTRIBUTION
Shares of common stock covered hereby may be offered and sold from time to
time by the selling stockholders, or by their pledgees, donees, transferees,
distributees or other successors in interest. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling stockholders may sell such shares on the Nasdaq
National Market, or in private sales at negotiated prices directly or through a
broker. The selling stockholders and any underwriter, dealer or agent who
participate in the distribution of such shares may be deemed to be
"underwriters" under the Securities Act, and any discount, commission or
concession received by such persons might be deemed to be an underwriting
discount or commission under the Securities Act. We have agreed to indemnify
the selling stockholders against certain liabilities arising under the
Securities Act.
Any broker-dealer participating in such transactions as agent may receive
commissions from the selling stockholders (and, if acting as agent for the
purchaser of such shares, from such purchaser). Usual and customary brokerage
fees may be paid by the selling stockholders. Broker-dealers may agree with the
selling stockholders to sell a specified number of shares at a stipulated price
per share, and, to the extent such a broker-dealer is unable to do so acting as
agent for the selling stockholders, to purchase as principal any unsold shares
at the price required to fulfill the broker-dealer commitment to the selling
stockholders. Broker-dealers who acquire shares as principal may thereafter
resell such shares for their own account pursuant to this prospectus from time
to time in transactions (which may involve crosses and block transactions and
which may involve sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market, in
negotiated transactions or by a combination of such methods of sale or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
shares commissions computed as described above.
We have advised the selling stockholders that the anti-manipulation rules
under the Exchange Act may apply to sales of shares in the market and to the
activities of the selling stockholders and their affiliates.
The selling stockholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any such broker-dealers, and any profits
received on the resale of such shares, may be deemed to be underwriting
discounts and commissions under the Securities Act if any such broker-dealers
purchase shares as principal.
In order to comply with the securities laws of certain states, if
applicable, our common stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
common stock may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
We have agreed to use our best efforts to maintain the effectiveness of
this registration statement with respect to the shares of common stock offered
hereunder by the selling stockholders until the earlier of the sale of such
shares or one year from the effective date of this prospectus. No sales may be
made pursuant to this prospectus after such date unless we amend or supplement
this prospectus to indicate that we have agreed to extend such period of
effectiveness. The selling stockholders may sell all, some or none of the
shares of common stock offered hereunder.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon by Shaw Pittman, McLean, Virginia, counsel to AXENT.
EXPERTS
The consolidated financial statements of AXENT as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31, 1998
appearing in AXENT's Annual Report on Form 10-K for the
11
<PAGE>
year ended December 31, 1998 are incorporated herein by reference in reliance
upon the report thereon of PricewaterhouseCoopers LLP, independent accountants,
given upon the authority of such firm as experts in accounting and auditing.
WHERE CAN YOU FIND MORE INFORMATION
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the Securities and Exchange Commission. Certain information in the
Registration Statement has been omitted from this prospectus in accordance with
the rules of the SEC. We file the annual, quarterly and special reports, proxy
statements and other information with the SEC. You can inspect and copy the
Registration Statement as well as reports, proxy statements and other
information we have filed with the SEC at the public reference room maintained
by the SEC at 450 Fifth Street, NW, Washington, D.C. 20549. You can obtain
copies from the public reference room of the SEC at 450 Fifth Street, NW,
Washington, D.C. 20549 upon payment of certain fees. You can call the SEC at 1-
800-732-0330 for further information about the public reference room. We are
also required to file electronic versions of these documents with the SEC, which
may be accessed through the SEC's World Wide Web site at http://www.sec.gov.
Our common stock is quoted on The Nasdaq National Market. Reports, proxy and
information statements and other information concerning AXENT Technologies, Inc.
may be inspected at The Nasdaq Stock Market at 1735 K Street, NW, Washington,
D.C. 20006.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" certain of our publicly-
filed documents into this prospectus, which means that information included in
these documents is considered part of this prospectus. Information that we file
with the SEC subsequent to the date of this prospectus will automatically update
and supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, until the
selling stockholders have sold all the shares.
The following documents filed with the SEC are incorporated by reference in
this prospectus:
<TABLE>
<CAPTION>
SEC File No.: 000-28100 Period/Filing Date
----------------------- ------------------
<S> <C>
Annual Report on Form 10-K.......................... Year ended December 31, 1998
Quarterly Report on Form 10-Q....................... Quarter ended March 31, 1999
Current Report on Form 8-K.......................... Filed April 13, 1999
Definitive Proxy Statement.......................... Filed on April 30, 1999
Description of common stock in registration
Statement on Form 8-A............................... Filed March 29, 1996
</TABLE>
We will furnish without charge to you, on written or oral request, a copy
of any or all of the documents incorporated by reference, other than the
exhibits to those documents. You should direct any requests for documents to
Gary M. Ford, Vice President and General Counsel, AXENT Technologies, Inc., 2400
Research Boulevard, Rockville, Maryland 20850, telephone: (301) 670-3523.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling AXENT pursuant to the foregoing provisions, AXENT has been informed
that in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses and costs expected to
be incurred in connection with the sale and distribution of the securities
offered hereby, other than underwriting discounts and commissions. All of the
amounts shown are estimated except the SEC registration fee.
<TABLE>
<CAPTION>
<S> <C>
SEC filing fee..................... $ 3,870.79
Nasdaq listing fees................ 17,500.00
Printing expenses.................. -0-
Legal fees and expenses............ 10,000.00
Accounting fees and expenses....... -0-
Transfer agent and registrar fees.. -0-
Miscellaneous expenses............. 3,629.21
----------
Total.......................... $35,000.00
==========
</TABLE>
All expenses will be borne by AXENT Technologies, Inc.
15. Indemnification of Officers and Directors
Section 145 of the Delaware General Corporation Law ("Section 145") permits
indemnification of directors, officers, agents and controlling persons of a
corporation under certain conditions and subject to certain limitations. The
Registrant's Bylaws include provisions to require the Registrant to indemnify
its directors and officers to the fullest extent permitted by Section 145,
including circumstances in which indemnification is otherwise discretionary.
Section 145 also empowers the Registrant to purchase and maintain insurance that
protects its officers, directors, employees and agents against any liabilities
incurred in connection with their service in such positions.
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or director.
16. Exhibits
The following exhibits are filed or incorporated by reference, as stated
below:
<TABLE>
<CAPTION>
Exhibit Number Description
<S> <C>
5.1 Opinion of Shaw Pittman
23.1 Consent of PricewaterhouseCoopers LLP, Independent Auditors.
23.2 Consent of Shaw Pittman (included in Exhibit 5.1)
24 Power of Attorney
</TABLE>
17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-1
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1993 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rockville, State of Maryland, on May 21, 1999.
AXENT TECHNOLOGIES, INC.
By: /s/ John C. Becker
------------------------
John C. Becker
Chief Executive Officer
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints John C. Becker, Gary M. Ford and Craig E. Chason,
his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John C. Becker Chairman of the Board, Chief May 21, 1999
- ----------------------------------- Executive Officer and Director
John C. Becker
/s/ Robert B. Edwards, Jr. Vice President, May 21, 1999
- ----------------------------------- Chief Financial Officer and
Robert B. Edwards, Jr. Treasurer
/s/ Richard A. Lefebvre Director May 21, 1999
- -----------------------------------
Richard A. Lefebvre
/s/ Gabriel A. Battista Director May 21, 1999
- -----------------------------------
Gabriel A. Battista
/s/ John F. Burton Director May 21, 1999
- -----------------------------------
John F. Burton
/s/ Timothy A. Davenport Director May 21, 1999
- -----------------------------------
Timothy A. Davenport
/s/ Kevin A. McNerney Director May 21, 1999
- -----------------------------------
Kevin A. McNerney
</TABLE>
II-4
<PAGE>
Exhibit 5.1
[Shaw Pittman Letterhead]
May 21, 1999
AXENT Technologies Inc.
2400 Research Boulevard
Rockville, Maryland 20850
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for AXENT Technologies, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company with the Securities and Exchange Commission of the Registration
Statement on Form S-3 under the Securities Act of 1933, as amended (the
"Registration Statement"), relating to the sale, from time to time, of up to an
aggregate of 1,337,531 shares (the "Shares") of the Company's common stock, par
value $.02 per share, by certain selling stockholders identified in such
Registration Statement.
Based upon our examination of the originals or copies of such documents,
corporate records, certificates of officers of the Company and such other
instruments as we have deemed necessary, and upon the laws as presently in
effect, we are of the opinion that the Shares have been validly issued and are
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters."
Very truly yours,
/s/ Shaw Pittman
Shaw Pittman
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated January 26, 1999 relating to the
financial statements and financial statement schedules, which appears in Axent
Technologies, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1998. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
PricewaterhouseCoopers LLP
McLean, Virginia
May 21, 1999
